It is illegal to write bad checks as payment owed to another person or company. It is a type of fraud because the person giving the check is falsely representing that the check has value and will be valid payment for what is owed. There is a statute of limitations enforced in Alabama to collect on a bad check.
Statute of Limitations
According to Alabama's Civil Code Section 7-3-118, the statute of limitations to collect on bad checks is six years. Section 7-3-118 (a) states "An action to enforce the obligation of a party to pay a note payable at a definite time must be commenced within six years after the due date or dates stated in the note..." Meaning, if payment was made in the form of a check that was not valid, the person or company owed the money can bring monetary action against the person who wrote the bad check within six years of the due date.
It is the responsibility of the party who is owed the money to make the demand for payment if the check is not valid. If a principal or interest payment has been made by the obligated party to the owed party, then the owed party can still collect on the bad check if it is over the six-year limit. If a demand for payment was never made for a period of 10 years, then the party owed cannot make a claim to collect.
Types of Checks
If payment was made with a certified check, teller's check, cashier's check or a traveler's check, then the demand for payment must be made within three years. If the check was not due until a certain date, even if the date of the bad check was before the due date, the statute of limitations commences from the due date and not the date of the check.
If there is a type of theft involved with the tender of the bad check, the party owed has three years to take action against the fraudulent party. According to subsection (g) of Alabama Civil Code Section 7-3-118, "Unless governed by other law regarding claims for indemnity or contribution, an action for conversion of an instrument, for money had and received, or like action based on conversion, for breach of warranty, or to enforce an obligation, duty or right is not governed by this section and must be commenced within three years after the cause of action accrues."
According to Alabama statute, if a check presented for payment was late and the person owed accepts the payment, the check is not considered to be bad as long as it can be cashed. The person accepting the late check made the check valid by accepting payment under the circumstances.
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